Well it’s the final run up to Christmas and I imagine that most people won’t be able to do much between now and the new year in preparation for the 20% VAT rate. But here are just a few last minute reminders about things that can help every business deal with the new rate:
• Take DELIVERY of new cars before 4 January so that you can get them at the 17.5% VAT rate, even if you don’t pay until after that date.
• Make sure that you have got enough money in the bank to pay additional VAT on purchases from 4 January – that additional 2.5% on standard rated purchases and expenses could make a significant difference to your cashflow until you start to receive the additional VAT on sales.
• Do you import standard goods from non-EC countries? Make sure that you’ve increased your deferment guarantee to pay for the additional VAT cost. Consider applying for SIVA to reduce guarantees by the VAT element. It’s too late now to get it in place for January but certainly worth applying to use the scheme longer term.
• Avoid paying unnecessary additional stamp duty land tax by finalising deals by 3 January. SDLT is normally chargeable on the VAT inclusive value of property deals so get your solicitors working hard to make sure that your deals are done before 4 January.
• Take control over your VAT cashflow by ensuring that suppliers charge 17.5% VAT for any goods or services supplied (ie physically delivered or carried out) before 4 January so that you’re not paying the 20% rate before you have to.
• And get your invoices for goods and services supplied on or after 4 January out the door as soon as possible so that you start collecting 20% VAT from your customers asap, especially if your first VAT period of 2011 ends on 31 January. I doubt that HMRC will be very sympathetic to businesses who are make late or incomplete payments because their customers haven’t paid their 20% VAT on time!
I’m sure that you’ve all got things pretty well in place for 4 January, having been through the process last year. But if you need any last minute help, remember to put your queries on the forum and I’ll do my best to reply this week. I’ll also be checking in between Christmas and new year in case any last minute issues crop up.
In the meantime, let’s hope the country manages to open for business for the final week before Christmas!
Marie